According to the OECD, the German economy will spend the entire year 2024 in recession and will recover by only one percent next year. Cars from German factories are losing ground in the world market to China to a large extent, Mario Draghi’s research has revealed, and according to statistics from the European Automobile Manufacturers Association (ACEA), new electric cars are not selling even in Europe itself. The German government is trying in vain to prevent the European Commission from introducing a tariff of up to forty-five percent on the import of electric cars from China from November 1. According to research by ifo.de, 44 percent of German entrepreneurs fear that their business prospects will worsen after Donald Trump’s return to the US presidency.
There would be even more bad news that came out of Germany in October. At the same time, when the domestic economy depends on the economy of a large neighbor, this is also bad news for the Czech Republic.
Therefore, the news that German Chancellor Olaf Scholz has opened a Mercedes factory for the recycling of car batteries in Kuppenheim in Baden can be an inspiration for the Czechs. It is not a new factory as much as it is one of the chancellor’s statements: “Some say that China is much better at electric motors than we are, but German companies do not have to worry about the this competition,” said Scholz. He recalled that the Germans already faced a similar challenge to China in the 1970s and 1980s, when cars from Japan flooded Europe, or when Korea launched an export attack launched at the beginning of this century.
This statement can have several interpretations. Of course the chancellor wanted to show that German car manufacturers are definitely not on their knees. After all, the ACEA association report says that European car sales are falling in Europe itself and that this also affects the Germans, but German car manufacturers are the least affected. In the list of five brands that today sell more or the same compared to the period before the crisis, in addition to Japanese Toyota, Korean Hyundai and now Chinese Volvo, there are also German BMW and domestic Skoda , which can also be counted as Germany. . Volkswagen, Audi and Mercedes break no more than 20 percent, and their production breaks are no longer increasing.
And as is known, these companies countered the decline in sales with higher prices. If anyone in Europe has seen much greater losses, it is the car companies with French, Italian and American owners. In this situation, Germany has enough strength to face the Asian competition.
However, there is also a second explanation, according to which Olaf Scholz wanted to explain himself against the decision of the European Commission, which has included taxes on Chinese electric cars since November. You could say he is just doing the work of the German car lobby. Volkswagen and BMW are opposing the tariffs simply because they manufacture some electric cars in Chinese branches, and from November they can only send them to Europe with a 30 percent tariff. That wouldn’t be the worst, though.
As the China Daily reports, German car makers, which include Audi, Porsche and Mercedes as well as Volkswagen and BMW, make a third of their sales in China. If China interprets European tariffs on electric cars as evidence of a trade war – and it’s hard to imagine it will interpret it otherwise – it will erect barriers against large German car imports. So when Scholz gets the European Commission to lower the import tariff, he may not only be a down-to-earth anti-protectionist, but also a down-to-earth lobbyist -to-land in corporate payment.
On the other hand, the third possibility of interpretation gives weight to the statements of the German Prime Minister, whether one agrees with him or not. It is not only about China, news from other continents also tells about the future of trade wars, something the world has not seen for decades. The Americans have imposed a 100% tariff not only on all Chinese cars, but also on parts, including players and navigation devices, supplied to European car companies or American from China, even if they only cost a few dollars. By doing this, they are effectively forcing Europe and also Japan to stop working with China if they want to sell any cars in America at all.
In this context, Scholz’s campaign is an attempt to prevent the European Commission from interfering with American trade policy in Europe. It may be irresponsible for the German chancellor to support the economic rise of a non-democratic Asian powerhouse, or for a social democratic politician to be primarily a market genius. At least that’s what the German media, led by the Frankfurter Allgemeine Zeitung, think, and they don’t give words of praise to their chancellor.
2024-10-27 14:00:00
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